Intel’s AI comeback gathers pace with strong forecast and foundry gains
Intel forecast third-quarter revenue and profit above Wall Street estimates on Thursday, sending its shares up more than 5% in after-hours trading, as booming demand for AI data center chips prompted the company to raise its capital spending plans.
The chipmaker said it expects third-quarter revenue of $15.8 billion to $16.8 billion, above analysts’ average estimate of $15.1 billion, according to LSEG data. Adjusted earnings are forecast at 38 cents per share, compared with expectations of 27 cents.
Intel is benefiting from the rapid rise of agentic AI, in which autonomous software agents perform tasks such as coding and other knowledge work on behalf of users. The resulting expansion of AI data centers has driven a sharp increase in demand for the company’s central processing units (CPUs).
Although Intel’s shares have fallen more than 25% from their record closing high on June 22 amid a broader selloff in semiconductor stocks, they remain up more than 170% this year.
The results bolster CEO Lip-Bu Tan’s efforts to restore Intel’s technology leadership and compete more effectively with rivals such as Nvidia and Advanced Micro Devices (AMD) in the AI computing market. Investors continue to focus on the company’s data center and contract manufacturing, or foundry, businesses as key measures of the turnaround.
On a conference call with analysts, Tan said recent customer demand had convinced Intel to move ahead with high-volume production of chips based on its next-generation 14A manufacturing process in 2028. Last year, Intel warned it could abandon 14A if it failed to secure a major external customer, a move that would have significantly weakened U.S. ambitions to manufacture the world’s most advanced semiconductors.
“I’m pleased to see the increasing momentum on customer engagements for Intel 14A, and I’m increasingly confident that 14A will be a highly competitive process,” Tan said.
For the second quarter ended June 27, Intel reported revenue of $16.13 billion, up 25.4% from a year earlier, while adjusted earnings came in at 42 cents per share. Analysts had expected revenue of $14.42 billion and adjusted earnings of 21 cents per share. Adjusted gross margin reached 41.8%, above expectations of 38.8%.
“The stock can continue revaluing if Intel converts the current data center shortage into sustained revenue growth, improves foundry economics and finally announces the external customers needed to validate the next stage of the manufacturing turnaround,” said Shay Boloor, chief market strategist at Futurum Group.
The rapid adoption of AI agents has triggered a resurgence in demand for data center CPUs. Intel executives have previously acknowledged they were caught off guard by the pace of demand, with orders exceeding the company’s manufacturing capacity.
Chief Financial Officer David Zinsner told Reuters that the stronger outlook had prompted Intel to raise its capital expenditure forecast for 2026 from $18 billion to $20 billion, with spending expected to increase significantly again in 2027.
Zinsner said Intel has signed three- to five-year agreements with customers covering data center CPUs and specialized AI chips, known as XPUs. Some contracts include commitments on both pricing and volumes, while others cover volumes only. He added that the company would remain disciplined on capital spending, noting that long-term agreements can be renegotiated as market conditions evolve.
Intel ended the quarter with approximately $30 billion in cash and access to a further $10 billion credit facility. Zinsner did not rule out a future share offering, although none is currently planned.
“I wouldn’t dismiss the possibility that we would do that. But no specific plans at this point,” he said.
Intel’s Data Center and AI division generated $6.26 billion in second-quarter revenue, comfortably ahead of analysts’ expectations of $5.37 billion.
Its Client Computing Group, which sells laptop and desktop processors, generated $8.88 billion in revenue versus expectations of $7.89 billion. Zinsner said unit shipments declined, but higher average selling prices reflected Intel’s shift away from entry-level chips toward higher-end processors.
Shares of Arm Holdings and AMD also rose in extended trading.
Intel’s foundry business reported second-quarter revenue of $5.77 billion, exceeding analysts’ estimates of $5.55 billion.
The company also secured Tesla as a customer for its next-generation 14A manufacturing process, which will be used for the automaker’s planned “Terafab” AI chip project. Expectations of another major customer increased in April after President Donald Trump said Apple had agreed to manufacture processors with Intel, although neither company has confirmed such an agreement.
“There have been lingering questions ever since Lip-Bu Tan took over, and it put a cloud of uncertainty around the foundry business,” said Bob O’Donnell, president and chief analyst at TECHnalysis Research. “Those clouds are now largely gone.”
